Introduction to imbalance charts (orderflow trading):

A ЁЯз╡

(1/n)

Orderflow charts essentially show the real time buying and selling happening in the markets.

In below chart, you can see how market sell orders are shown to the bid side and market buy orders are shown to the ask side.

(2/n)
Using this, one can identify big buying and selling happening at various prices.

Imbalance charts takes this one step forward. How so? Read on to find out.

(3/n)
Imbalance charts shows buying and selling imbalances at various price points. How does it matter?

Imbalance here implies to what extent is buying more than selling and vice versa.

(4/n)
Why is that important? As a trader, if we know that buying at a particular level is x times more than selling or vice versa, it would help us understand the strength of supply or demand coming into the market.

(5/n)
Imbalance charts highlights (as per user pref), those prices where imbalances happen in live markets

If bid side imbalance is highlighted, it means selling is x times more than buying and if ask side imbalance is highlighted, it means buying is x times more than selling

(6/n)
In below chart, orange blocks are where selling is 3 times more than buying (see arrow).

(7/n)
The default setting in most imbalance charts is 300%. It means, if buying or selling at a price zone is 3 times more than the other, chart shows it.

(8/n)
Now, is one imbalance important or more imbalances mean something else?

If we are seeing buying or selling pressure at one point, we would like to see it continue for trend confirmation.

(9/n)
Now, this brings us to stacked imbalances. If 3 imbalances appear back to back on bid or ask side, we can set the chart to highlight it.

This implies a good area of support/resistance on intraday basis.

(10/n)
Chart automatically draws support/resistance if 3 or more imbalances appear consecutively.

(11/n)
Don't you think this kind of info can be used in real time to make trading decisions?

The imp part about using imbalances is to determine the tick size.

(12/n)
Tick size talks about the no of ticks you want to see the orderflow data for. This depends on preference of user.

Based on it, imbalance settings can be customized as per a trader's choice which will help them determine crucial intraday levels.

(13/n)
If you find this info useful, please re-tweet and like this thread.

Follow me @KillerTrader_ and https://t.co/3Jy68AkLNe (telegram) for more such info.

Charts powered by @gocharting

#trading #nifty

More from Trader Abhishek

Nifty basic volume profile analysis for today:

Yesterday, shared about various types of volume profile analysis and how to prepare for next day. Read here


We had discussed that a "p" shaped profile and close at highs indicates longs are in control of the market.

It also indicates high chances of uptrend continuation next day.

But

(2/n)

How to trade a failure of trend continuation? Yesterday, we saw a "P" shape profile in Nifty and close at highs.

But we failed to continue upmove today.

(3/n)


We opened positive but the opening breakout not sustaining is first cue to understand that bulls are lacking initiative to push prices up further.

(4/n)

For confirmation, one can use orderflow as well to see real time supply demand flowing into the market.

At open today, we saw fresh sellers coming in a bullish opening.

(5/n)

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ADI SHANKAR AND SRI TOTAKACHARYA

Adi Shankaracharya chose his disciple Totakacharya to be the first head of the Math at Joshimath.
The Narsingh Mandir (Mandir of Sri Narasimha) in Joshimath is one of the 108 Divyadesams and also the home of Badrinath during the winter months.


Totakacharya was earlier a boy named тАШGiriтАЩ and a devout disciple of Adi Shankaracharya. Unlike others, he was not known to be an expert in Shastras but his dedication to his Guru was complete and he used to listen to His discourses with utmost faith and devotion.
@SriRamya21


One morning as Adi Shankara and his disciples were getting ready for the discourse, Giri was delayed. The other disciples urged their Guru to commence the lesson on Bramhsutra Bhashya telling him that Giri would anyway not be able to comprehend its deep meaning.
@RajeAiyer


Adi Shankar responded тАЬрдирд╛рдпрдорд╛рддреНрдорд╛ рдкреНрд░рд╡рдЪрдиреЗрди рд▓рднреНрдпреЛ рди рдореЗрдзрдпрд╛тАЭ тАУ Atman cannot be attained through discourses or mere intellect.
He,then, awakened the supreme knowledge in Giri.
Giri spontaneously composed: рд╢реНрд░реА рд╢рдЩреНрдХрд░рджреЗрд╢рд┐рдХрд╛рд╖реНрдЯрдХрдореН extolling his GuruтАЩs grace.


Adi Shankaracharya granted sanyasa to Giri and gave him the name Totakacharya.
The story of how Giri became Totakacharya is a great example of the importance of faith and devotion in your Guru and not the mere knowledge of the Shastras.
@DetheEsha